• Net Sales Q4: SEK2.3 billion, representing 5.7% organic growth.
• Full Year Net Sales: SEK8.6 billion, with 4.7% organic growth.
• Pick & Mix Growth: 17.3% in Q4, accounting for 28% of total sales.
• Adjusted Profitability Q4: 11.3%.
• Net Debt to EBITDA: 1.3, well below the long-term target.
• Dividend Proposal: SEK1.10 per share.
• Free Cash Flow Q4: SEK264 million.
• Full Year Free Cash Flow: SEK602 million, up SEK106 million from 2023.
• Branded Package Growth: 1.6% in Q4.
• EBIT Margin Q4: 11.3%, highest quarterly profit ever at SEK258 million.
• Full Year Operating Profit: SEK910 million.
• Cash on Hand: SEK4.3 billion.

• Warning! GuruFocus has detected 8 Warning Signs with FRA:0CL.

Release Date: January 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cloetta AB (FRA:0CL) reported a strong Q4 with SEK2.3 billion in net sales, marking a 5.7% organic growth.
• The company achieved an adjusted profitability of 11.3% in the quarter, surpassing their challenge of maintaining double-digit profit despite high cocoa prices.
• Pick & mix segment showed significant growth, with a 17.3% increase, contributing to the overall sales performance.
• Cloetta AB (FRA:0CL) maintained a strong financial position with a net debt to EBITDA ratio of 1.3, well below their target of 2.5%.
• The company reported its highest ever quarterly profit of SEK258 million, with a full-year profit of SEK910 million, indicating robust financial health.

Negative Points

• High cocoa prices remain a concern, potentially impacting future margins if not managed effectively.
• Branded package volumes were down by about 700 tonnes, primarily in the chocolate segment.
• The decision to put the greenfield plant project on hold due to energy supply risks could delay future capacity expansion.
• Marketing investments are expected to increase, which may pressure margins if not offset by corresponding sales growth.
• The company faces challenges in further strengthening margins, particularly in the Pick & mix segment, despite current profitability improvements.

Q & A Highlights

Q: What were Cloetta's sales in the US for 2024, and when can we expect a CapEx forecast for 2025? Also, how will high input prices affect future quarters? A: Frans Ryden, CFO, stated that while the US is not a major part of Cloetta's business, sales there grew by about 30% in 2024. An updated CapEx forecast will be provided during the Investor Day, which will also address the greenfield project reassessment. Regarding high input prices, Cloetta expects to manage these costs effectively, as they have done previously, despite potential delays between cost increases and pricing adjustments.

Q: Will marketing investments increase year-on-year in 2025? A: Frans Ryden, CFO, confirmed that marketing investments will continue to increase in Q1 2025. The company remains flexible, adjusting spending based on market conditions and competitor actions, with a trend of increasing marketing spend year-over-year.

Q: How should we consider the impact of high cocoa prices on Cloetta's margins? A: Frans Ryden, CFO, indicated that while cocoa costs have risen, Cloetta has managed these effectively in Q4 and throughout 2024. The company expects to continue managing these costs without significant negative impacts on margins.

Q: What strategies are in place to strengthen margins in the Pick & Mix segment? A: Katarina Tell, President of Cloetta Sweden, mentioned that the company is focused on improving margins by refining their repeatable model for Pick & Mix, which allows for expansion into new markets and customers.

Q: In which region is Pick & Mix experiencing the most growth? A: Frans Ryden, CFO, noted that all Nordic countries are experiencing double-digit growth in the Pick & Mix segment, indicating a strong trend across the region.

Q: What would be required for Cloetta to invest more in the US market? A: Katarina Tell, President of Cloetta Sweden, stated that the company is still in the early stages of exploring the US market and is currently investigating potential investment requirements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.